 with Silicon Angle on theCUBE. We are here in Palo Alto for a special Cube conversation with Noam Shendar, the CEO of Zadar Store, who stopped in to share with us his perspective on his company and success, unique technology, and we are here to talk about what's going on in the industry, what's the trend? Extract that signal from the noise and share with you, Noam, welcome to this Cube conversation. Thanks, sir. So, you guys have been very successful. We've talked, you've been briefing the analysts, obviously we had a segment on your company's value proposition on the Cube conversation, but the cloud is hot and there's so much going on in the industry right now between the shift and the inflection point, which is rare in the technology business to be actually in the water, so to speak, as these waves are of innovation and wealth creation and customer value is all happening at the same time, it's very rare. So, it's fun to have you here and I want to ask you, cloud, okay, go back five years, I mean the cloud is just too risky, Roche Motel, once you get in you can't get out, but the economics are just undeniably amazing. Yes, you can save on labor costs by as you go, a little bit unorthodox initially, but now it's mainstream, five years now, and Amazon reinvent, it was clear the enterprise is clearly in the cloud with shadow IT, the application side, businesses have grown like Splunk Service Now, you name the list and list of companies that have won by land and expanding, Tableau Software and Big Data, you name it, that's the future. Yes, that's a done deal. But the infrastructure's interesting, not everyone's winning, there's been some dead bodies in the storage business, Nirvonix, box.net or box.com has gone public, we see their numbers, they're not doing well in the enterprise, I mean they're shadow IT oriented, more collaboration, what's going on, how are you guys so successful and why is the cloud enterprise game so on fire right now from an opportunity standpoint and what are the challenges? The reason cloud is successful and the reason it's so exciting to watch is unlike previous disruptions, it's both a technological and a business model disruption and the business model disruptions are the more permanent, lasting and damaging to the status quo. So this is why we're all riveted by this because this is both a success story but also a train wreck as you mentioned for some. The, for those who are not catching this wave, the reason that if we look today versus five years ago that it's become mainstream whereas before five years ago there was a lot of skepticism is both for objective reasons and subjective. So there was a fear factor that was purely subjective five years ago and that is dissipated because the track record speaks for itself but there are also things missing in the cloud that kept enterprise customers out. Enterprise customers are- Like what? Was it just flash? Was seeing flash, all flash arrays on the hardware side really dominate? That's just the amount of nowhere in the past three years. It's not just storage. So part of storage was where the performance wasn't there, the availability of flash tier. So neither Amazon nor Microsoft Azure had a flash tier at the time and they both do now one in production, one as a beta. So kudos to them for listening to the customers and deploying quickly. By the way, that's one of the beautiful things about cloud. The application pace is much faster. So if you look at Amazon's rate of new product introduction, your head spins when you look at it. But every week there's a new product deployed and then Microsoft Azure- By the way, that was Facebook's motto as well. Just keep innovating in this release, release, release. And decouple. And decouple. Get the product out. Don't worry about dependencies within the rest of the company. Those won't come. So it's like line up later. Release first and line up later. So it's really amazing. And then Microsoft Azure is another great story because they weren't in the rear view mirror even of AWS just a few years ago. Now they're flashing their brights at AWS and get out of the way. I'm passing. But this is not just a technical thing. It's also every industry. For instance, I was commenting on the demise of our commerce at GigaOM that went under, closed their doors and their business model just wasn't working. The content was great. Our content, we model the Amazon while it keeps shipping content in all formats and video, whatever. But it's just every market's now becoming connected. When you have connected business models, the cloud is the natural place. Don't you agree? So it could be a Tableau. It could be a business model innovation and a technology. So they're not necessarily mutually exclusive. You don't have a business model innovation with no tech or tech and then enabling someone to do business or do both. Exactly. And the powerful ones both, right? Exactly. You can do both. It's the perfect story. Exactly. It's a multiplier effect. And what we're seeing with our own businesses, doing both at the same time creates a way to sell that is almost competition proof when you think of the incumbents as competition. Not saying that somebody else couldn't come out and do something akin to what we're doing. But in terms of the existing companies, there's too much to change. If they have to change both the technology and the business model, it's almost too high. What's interesting, I want to get your perspective on this is what is the future? Because I was talking about this at the Open Compute Summit, we just did a live stream on it. And with Open Source, the computer science approach for coders is more software oriented, is more LegoBlock engineering versus hardcore coding, which is to build your own libraries. So now you're more of a chef in terms of you're putting pieces together in recipes. That's the new skill set. So cloud also enables that. So you guys have done something with the technology. So I want you to talk about that, Danette, because you're doing both things, which is hard to do. You're doing an operational business model and you have technology innovation. What is under the foundation of your business that would be the enabler for that? I mean, you guys are doing something really hard. But what was the foundation? What got you to that point? It came from that realization of two things. One is that storage is rife for disruption because it's so difficult to purchase and that cloud is the answer to those problems. And that until we came along, those two were a Venn diagram of two circles that didn't intersect. But you did cloud first. Your decision was let's go cloud first and the Amazon relationship. The reason we did cloud first for two reasons. One is the on-premises market was much more crowded. Still is much more crowded. They're highly competitive and cost intensive too, capital intensive. Whereas in cloud, if we go into an Amazon environment and we provide premium storage, we're the only provider of premium storage. And by the way, we're being compared to very basic storage. We mentioned earlier the early on cloud was not very enterprise ready, didn't have an SSD tier. Well, from day one we had an SSD tier at AWS. So what that meant is if you compared us to very basic services from AWS, Azure and others, it was a no-brainer. By the way, we're premium product, more expensive. So we never competed with our partners at Amazon and Azure. If their basic services were good enough, the customer picked them. But if they weren't good enough, then the customer was willing to pay extra to go with our option. So that's why we started with cloud. It was a very clear need and a very easy for us to differentiate ourselves. And then we used that time in the cloud to do two things, harden the product. Just like the cloud providers do and keep releasing new features, we hardened it, we added features, we made it far more complete from an enterprise perspective. And then we said, hey, enterprise customer, would you like the same on-premises? If you already like the features at Amazon, how would you like the same business model with private storage? And that's when the floodgates opened. Yeah, so you guys had that vector in, and some people go the other way and try to do kind of a halfway, stuck in the middle strategy. What was the biggest learning that was magnified in your success? You guys have interesting model, you've been kind of growing along, getting all of a sudden boom, the growth hits in. What was that process like and what was the learnings that were magnified out of that? We learned so much about the as-a-service business model. We're all enterprise storage people, our history is in building boxes and selling them for an upfront price and like everybody else does. So this market was new to us as well and we learned very quickly that it's a double-edged sword. On the one hand, it's a powerful business model that customers love and adopt very quickly. On the other hand, and by the way, from a financial perspective, it's recurring. So the sale that I closed today continues to pay for a while. So any sale that I work on tomorrow is simply additive to that first sale. That's the good news. So you work a lot but that revenue curve is exponential because you're just building on your past revenue. The bad news is customers can leave, right? Easy in is also easy out. So we have to earn that recurring revenue every single day. So what's the argument that you can answer to when someone says, hey, you know what? You're just not as big as EMC or a NetApp. I'm not sure you're gonna be around in business. What if you go under? Nervonics went under. What do you say to that? We say a number of things. First of all, we have a lot of funding and we're not using a lot of it. So we're doing well enough. You're profitable. We can't yet announce profitability. But we definitely can say we have a very slow burn rate. Which gives- Give money in the bank. We have a lot of money. You have plenty of runway. Correct. So you give customers that confidence. The second thing we can say is we have a very consistent backer in Toshiba. Our largest investor. Not our only investor, but there are largest investors, Toshiba, out of Japan. A very long-term thinker has been with us with two consecutive rounds already. They're not going anywhere. And those customers who want- And they already got the cash in. So you already got the cash. We already got the cash. So we tell customers, and don't take our word for it. Call our Toshiba board member in Tokyo and ask him. And have him tell you what level of commitment he has to the company. And then the last is, and this is one of the things where technology really helps is our technology does not share drives, be they SSDs or spindles among customers. So John's drives are separate from Noam's drives. Which means should you ever want to leave, let's say you worry that we may not be around, you can take your drives. You have to buy them, but they're yours. And it doesn't affect any other customer. You mentioned a previous disaster, a company that went out of business. The problem there was all the data was commingled so every customer had to copy the data out. That was a nightmare too, because when they went out of business, I think one of the students was Fox or one of the big studios literally got caught big time and had a huge problem getting the data back. Exactly. They had like two week window to get it back. Exactly. That's a huge issue. So in our case, there's no issue. So you have no SLA issues at all. You basically have a clean SLA, service level agreement. You have a way for them to get their drives back if there's something that happens. They're unhappy of any kind. Correct. Okay, so I've got a big picture. If I'm a customer, I got a lot of things in my mind. I might not be thinking about storage all the time. I'm thinking about facilities, power and cooling. I got a lot of things I want off my plate. Storage costs is one of them, CapEx. So you have an OpEx, that's an interesting conversation starter. But I got a lot of other things going on. So how are you relevant in that conversation when you step up to the table with the CIO, or CFO, or C-level person? What's the, give us the take on, what's the vibe? What's the conversation? Hey, I save your life with storage, or what's, I mean, come on, what's the story? It's actually a very good conversation because we appeal to their desire to be the hero, the crusader, so to speak. They have for so many years been in the position of being the naysayer. Hey, CEO, I know what you need, but I can't deliver it to you. You didn't forecast it in advance, so it'll take me time to deliver on what you need. I want to help you, I'm on your team, but because of my CapEx restrictions, because I have to depreciate all the hardware, because of budgets, I can't turn on a dime. And the conversation we have is, hey, you could be the hero. You can go to your CEO and say, yes, I can, by tomorrow. And that opens their eyes. Yeah, one of the things that Dave Vellante and I always talk about this, because we're big fans at EMC and love their sales-focused customer-centric mentality. But at the end of the day, storage has always been kind of a corner case of get-the-business relationship. You have the customer account, and you work the sales motions on that. But now it's becoming such a central conversation because, one, storage isn't going away. Two, it's getting faster, lower latency, and all the business value is shifting to things like business model and obeisances from in-memory analytics, so you're seeing the flash. So what's happening is that storage is becoming as central to the C-level conversation as the power and cooling conversations, because that's direct hard money. So now you have direct top-line impact with storage, and it's growing like crazy. So we see storage doing that, so that means the EMC's got to shift the conversation to, oh, yeah, we got all your stuff taken care of. Here's a discount, always keeping the customer to, if they're not pushing the envelope on the capex issue and the business value. Is that where you're winning? Is that the key conversation? Yeah, the conversation is around agility, it's around the capex, it's around the up-ex, and it's about how the business can support the corporate goals, both the forecasted one and the unforeseeable ones. And the unforeseeable ones is what keeps the CIO up at night. The CEO or CFO comes to them tomorrow morning and says either we have a new initiative and we need to deploy it, we have three months to deploy it, or else we sink. Or we've hit hard times, we need to tighten the belts, your budget is now 10% smaller than you thought it was going to be. In the traditional model, you've already bought the hardware, it's your capex, you're depreciating it, so you can't save any money there, that's already locked in, so guess where you're gonna save, you're gonna lay off people to get to your 10% goal. With us, that is not the case. Delete or archive what you don't need, reduce your usage of the storage and your monthly bill goes down immediately. You can be the hero and you don't have to lay anybody off. By the way, laying people off is self-defeating because now you can do even less. Yeah, I always say people are gonna be reshifted, and even the DBA is in the storage roles, the Oracle database kind of model, that's gonna shift to more data science, you mentioned some of those titles. So that's a trend that we see, so it's more of a redistribution of where the value shifts. That being said, how does a startup like you guys are in general to start up out there watching? How do you compete with the big whales? I mean, because the market, when the money hits the table, customers are gonna go with the safe bet. How do you guys and how should startups compete in this cloud game where you can be nimble, you can be a revolutionary, you can be aggressive and still win the game? So how do you guys, what's your general advice? One is the unique value proposition. It's unbeatable. If the customer wants storage on-premises as a service, then we're their answer, and the traditional vendors are not. And we're seeing this in RFPs now. So we're getting RFPs from some of the largest companies on the planet, and they're using our language in the RFPs because that's what they want. That's their dream come true in terms of an IT experience. So that's one. Two is it's the service business model inspires confidence in the customer because they know, unlike the traditional model, if we don't do our job, we don't get paid. So the traditional vendors, they get paid up front, even if the experience is terrible after that. We stop getting our money if we don't keep the customer happy every single day. So customers get that. And the way they talk to us is like a partner, not like a vendor, but like somebody who will be with them for the long term. And that's another very, very significant advantage versus the competition. And then the last piece is the track record. The reason we started at AWS is because we could, and we didn't need to convince anyone, we could place our storage next to AWS, use AWS Direct Connect. And also we do the same with Azure, with ExpressRoute, and begin offering our service and then establish a multi-year track record of reliability. So I gotta ask you a final question on this one is what's the difference between OpenStack and AWS? And what should people know about Amazon web services that have been so amazing? Why is it so successful? And what could the OpenStacks and these other communities learn from AWS? AWS is amazingly customer-focused. And as we mentioned, very, very nimble. They're able to release products very quickly, but that's not good enough by itself if what they're releasing is not relevant to the customer. But they listen to their customers and they move as quickly as they can to address those needs. And we have seen this. When we were a tiny, tiny customer, AWS was releasing features that were based on our requests because it made market sense to them. Ever since, we've been amazed by their ability to listen and then execute. They don't hype up. They do listen to the customer. They move fast. They ship a lot of code and they're nimble. I mean, they're unorthodox by today's standards, but they're gonna do massive refinancing. But don't forget and don't underestimate Azure. So AWS is now at risk of being lapped by Azure. So why do you say that? First, do you see a number of reports coming out regarding the revenue that Azure is generating and it's getting into the same order of magnitude as AWS and it's growing much more quickly? My guess for why Azure is so successful in addition to the technology is the customer base. So the enterprise customer base, they're Microsoft customers already. So Microsoft can tap their existing clientele for Azure, whereas AWS has to add them one by one. Yeah, yeah, they have a huge green field on Amazon but install base it as your issue. What about Google Cloud? And VMware, is VMware gonna be left out in the cold? I mean, certainly there's a three horse race going on now, Amazon, Azure, Google. What does VMware play into all this? So VMware is the other company that already has the enterprise clientele and Cloud is a must for them because they have everything to lose. If everybody migrates to AWS, that's lost revenue for VMware. So they recently announced the Google collaboration. I think it's very smart because those are the two after the first two players and rather than fighting each other. And Google has no presence in the enterprise. That's right. So they have huge developer traction. Correct. Interesting. Yeah, we're reading the tea leaves. Cube conversation. I appreciate coming on here for this Cube conversation and adding some content, sharing it out there. Really appreciate it. Great to see you. Congratulations on your success. Thank you. No, I'm Shen Dar, CEO of Zidara Software. Watch those guys. Zidara Software as a service, our storage as a service, taking the software as a service trend, making it storage. What do you call it? Pass? What do you call it? Opus. Opus, but not platform as a service. On-premises as a service. On-premises as a service. Not to be confused with platform as a service, but congratulations. Thank you. This is the Cube conversation. Palo Alto, I'm John Furrier. Thanks for watching.